TGA - Thorn Group

[kermit345]

tech/a you've consistently referred to people purchasing at $2+ and sitting on losses instead of using risk mitigation but i'm not aware of anyone in here purchasing that high and holding unless i've missed something. The only person i've seen discussing the stock thats been on it since the $2.20 days is PiouPiou and hes already stated his reasoning for holding (was already at a reasonable gain, has a large holding delivering consistently high dividends on his cost base for a retirement income stream which he's happy with).

I totally agree with you that risk mitigation is essential and in my short time investing in shares have already made a number of mistakes in holding for too long and ending up with a reasonable loss. However most here are mitigating their risk with cost bases around $1.50-$1.60 which we see as a significant enough margin of safety to a generalised price target of anywhere between $1.80 to $2.60 (personally i think closer to $2.00 is about right).

Your correct, we could have a stop loss of say 10% on our purchase price of $1.50 (my avg cost base) which would mean im stopped out at $1.35. But in that case you need to wait to recognise another bottom which you can't see until you have the hindsight of a broken down trend which invariably may mean you end up buying back in at $1.30 anyway.

Anyway I think risk mitigation is essential and can see where your coming from, however I think your still hung up on margin of safety and valuations and that they are in your view, useless. It would be interesting to know the avg purchase price of everyone around here to see who actually did buy in at the $2 mark.

My avg purchase price - $1.508

 

[tech/a]

Still waiting.

Craft.

I dont have the time to run this but a simple M/A on TGA would kill everything put of here.
Someone may do the maths--



Will answer others when I have more time.

 

[VSntchr]

It would be interesting to know the avg purchase price of everyone around here to see who actually did buy in at the $2 mark.

My avg purchase price - $1.508

Ive bought TGA in 2 lots, $1.66 and $1.35. AVG = $1.54.

Happy with current yield, although would put funds elsewhere if price approached $2+... I have a couple of stocks that I would like to add to!...no rush though.

 

[odds-on]

.My avg purchase price - $1.508

Avg price $1.42.

 

[ENP]

1.60, 1.52 and 1.47.

I love TGA.

30% odd profit rise and it's still cheap as chips.

 

[craft]

Craft.

I dont have the time to run this but a simple M/A on TGA would kill everything put of here.
Someone may do the maths--

View attachment 47210

Will answer others when I have more time.

Could someone with back testing software run this system and give us the entry and exit dates.

This discussion needs some numbers around it rather than just an assertion that the system would kill buy and hold.

 

[Julia]

1.60, 1.52 and 1.47.

I love TGA.

30% odd profit rise and it's still cheap as chips.

How is the above profit rise actually benefiting you at present?

 

[Ves]

12% increase in the dividend is always nice.

 

[Julia]

12% increase in the dividend is always nice.

Yes, I suppose it helps to slightly ameliorate the diminished capital.

 

[Ves]

Yes, I suppose it helps to slightly ameliorate the diminished capital.

I'm down 3%. I'll hardly lose any sleep over it. But thanks for your concern all the same.

 

[Nutmeg]

Yes, I suppose it helps to slightly ameliorate the diminished capital.

Come on, Juliar, put away the ouija board and stop trying to channel the snake-oil spirit of tech/a!

 

[Tightwad]

The valuation of course is all subject to it being able to sustain growth.. 30% proft is great, but it wasn't too long ago that JBH had a similar result.

 

[oldblue]

The valuation of course is all subject to it being able to sustain growth.. 30% proft is great, but it wasn't too long ago that JBH had a similar result.

Now that's one of the most sensible comments I've seen on this thread recently!

Extrapolating recent recents into the future doesn't work as a "valuation" method, IMO, if one doesn't also take into account the state of the real world.

 

[Ves]

The valuation of course is all subject to it being able to sustain growth.. 30% proft is great, but it wasn't too long ago that JBH had a similar result.

What valuation might that be?

 

[Klogg]

Now that's one of the most sensible comments I've seen on this thread recently!

Extrapolating recent recents into the future doesn't work as a "valuation" method, IMO, if one doesn't also take into account the state of the real world.

Yes, but JBH and TGA are two completely different companies... Comparing the two means you might want to re-read about TGA's business model...

And by that logic, I shouldn't touch any retailers... But plenty are still making profits!

 

[Ves]

By the way, 30% growth in NPAT (it's actually closer to 26%) isn't quite right.

If you take out the fact that the NCML acquisition was barely represented in the 2011 NPAT then organic growth is much lower.

From page 49 of the annual report:

Total EBIT for rental was $45,071 ($40,273 in 2011)

Using these figures organic growth for the main rental business was roughly 11-12% if you ignore interest and taxes.

Despite not being a traditional retailer this is still a cyclical business. Operating margins over the next few years, and top-line growth, will slow due to industry head-winds. Any in-depth valuation should take this into account. It will be interesting to see how the company handles it, but I believe their financial position is healthy, and the addition of NCML gives them the missing link in their debt management philosophy. This holds them in good stead to weather the storm.

 

[Julia]

I'm down 3%. I'll hardly lose any sleep over it. But thanks for your concern all the same.

You're welcome, Ves. Good luck with it. Truly.

Come on, Juliar, put away the ouija board and stop trying to channel the snake-oil spirit of tech/a!

If that's the most constructive comment you're able to make, might be best to say nothing.

 

[Nutmeg]

You're welcome, Ves. Good luck with it. Truly.


If that's the most constructive comment you're able to make, might be best to say nothing.

You ain't seen nothing yet, my little poppyseed!

 

[tech/a]

Kermit345
Lets see if I cant make this a little clearer.

Lets say you are averaging up in TGA.
Im using random entries and round numbers for ease.
Lets also say same size parcels again for ease.

10,000 @ .70 Average .70
10,000 @ 1.00 Average .85
10,000 @ 1.40 Average $1.03
10,000 @ 2.00 Average $1.27
10,000 @ 2.20 Average $ 1.46

Today's price $1.49

(A) holds until now and has a profit of $1500 Plus (Dont know the dividend but say 16c)
$8000.

(B) sells each holding as it crosses back below a buy price
now has a profit of $12,800 Plus $3200.

So your capital isn't at risk and your money is working for you far far harder.
You also have spare funds to either buy more or buy other things.

Just averaging a price and feeling warm and fuzzy because your not below your average price doesn't mean your utilizing your funds to their best potential.

If your managing your own super-fund then THAT means a whole heap!

Im no fundie but for guys who ponder over figures and value their holdings infinitum---why wouldn't you do it to YOUR OWN?---why would you not want (B) in YOUR books?

Anyway I think risk mitigation is essential and can see where your coming from, however I think your still hung up on margin of safety and valuations and that they are in your view, useless.

Look
Value it as often as you like but if the market falls below your buy price your valuation means diddly.
Same if I view it technically.
If it breaks $1.51 CONVINCINGLY and Ive made comments on a chart Id buy it.

But if it trades back to below my stop or moves in my direction far enough (1R) for me to move my stop to B/E and it takes it out---Ill be selling pronto.
No exposure!!!

 

[Ves]

Is anyone willing to share how they are calculating the capex of this business in terms of calculating a free cash flow to firm (FCFF) figure? Seems to be a few ways you could potentially do it. You could count all new asset purchases as capex, or you could attempt to define what is the replacement of existing assets at the end of their useful life and what is expansion of the existing asset base (new investment). The first method gives me a negative FCFF for all years that it has been listed.